Welcome to the Summer Protection Newsletter I am pleased to say that from Paradigm’s perspective there are a number of positives to come from Q1 2023 in terms of protection sales and we are trading in line with expectations in Q2 which is positive news. The same cannot be said for the mortgage market, with which protection is inextricably linked, unfortunately. If you have not already done so, you may find it useful to also read our latest mortgage newsletter here. From a period of optimism in Q1, compared to forecasts at the end of 2022, we have now appeared to hit another barrier with the uncertainty over interest rates linked to inflation and the subsequent pulling of rates by Lenders with often very little notice causing a number of issues for all mortgage advisers. I know the distribution industry as a whole is trying to work with Lenders to move to more consistency of timescales prior to rates being pulled, but market forces will not make this as easy as it would seem. I have written before in this newsletter that in the mortgage crash of 2007, many advisers ‘fled’ to the protection space, however the circumstances then and now are totally different. There was no liquidity in the intermediary mortgage space at the time and protection sales grew as there was simply no other financial services activities to undertake. Every mortgage adviser operating in today’s space knows that this is not the case now – there is plenty of potential activity and a drain on resource is evident on a daily basis with the time it is taking to fit a product to a client, only to see it disappear and instigate the beginning of a very labour-intensive cycle yet again. I think therefore that it is pretty crass to state that “Protection saels will rise if the mortgage market drops off” in today’s environment; indeed given the workload on many intermediaries, the case may be the absolute opposite and we could see a fall from those not employing protection “specialists” within their business due to the lack of available time. SwissRe statistics for 2022 In this edition, we are always pleased to give the Swiss e overview of the market which usually arrives in late May or June in respect of the previous year. It gives an indication on the state of the market for that year and some insights in to trends. Without trying to bombard you with statistics, the main highlights to arise from the report - based on policy numbers – are as follows: • In 2022, 2,114,559 new term assurance, whole life, critical illness (CI) and income protection (IP) policies were sold, a decrease of 7.8% from 2021 • Price competition for life cover continued into 2022, meaning the average of the cheapest 5 products, excluding low start plans, for a basket of cases was 2% lower in December 2022 compared with January 2022 • Market pricing for CI cover has been getting marginally more expensive, increasing by 0.5% over the same period Mike Allison Director of Protection Paradigm Protect Protection Market Update 04 SUMMER PROTECT NEWSLETTER
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